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What are the risks to the global economy and state aid?

COVID-19 presents an enormous challenge for the global economy. Governments are responding with interest rate cuts and quantitative easing programs on a scale not seen since the 2008 financial crisis. The response has also seen the introduction of measures designed to ease the burden for business, with deferrals for tax payments and emergency loan funding schemes introduced in a number of jurisdictions.

In the UK, a number of measures designed to support small business were already on the cards. These have been extended at Spring Budget in response to COVID-19 with business rates reliefs, a Coronavirus Business Interruption Loan Scheme and a £2.2bn grant scheme for small businesses. A dedicated HMRC COVID-19 helpline has been established for individuals and businesses seeking support.

The EU’s state aid framework enables Member States to take action to support individuals and businesses facing economic difficulties. Tax holidays, suspension of payments of corporate and value-added taxes or Social Security contributions or payments of wage subsidies are being introduced in a number of jurisdictions. The framework also allows support to be granted to consumers, for example, in respect of cancelled services which are not otherwise reimbursed or to help companies with urgent liquidity shortages. As the scale and severity of the situation worsens, the Commission is able to approve additional national economic support measures which would, ordinarily, have contravened state aid rules.

The travel restrictions introduced in response to COVID-19 are also raising issues for individual and corporate tax residency. Individuals will hope that local rules allow them to disregard days of presence beyond their control. Company directors may not physically be able to attend board meetings. As boards move to hold virtual meetings, companies, in particular those which are resident for tax purposes outside their jurisdiction of incorporation, will face challenges to maintain central management and control in the intended jurisdiction. There have been indications in some jurisdictions that temporary adjustments to normal operating practices introduced in response to COVID-19 may be disregarded but, with risks of exit charges and of becoming subject to a less favorable tax regime if tax residency moves, many corporates may consider delegating responsibilities or try to gain greater assurance from authorities.

Will the effect of the proposals in the Budget be to support businesses in a difficult trading period?

Update
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March 12, 2020

Tax

UK: Future Fund: A (liquidity) problem solved?

The launch of the Future Fund marks the UK Government’s response to ongoing concerns that high growth businesses within certain sectors (for example, technology and life sciences) affected by COVID-19 may be unable to access other UK Government business support programmes because they are at pre-revenue or pre-profit stage in their development.

Publication
|
May 20, 2020

Corporate, M&A and securities

US: The US updates Municipal Liquidity Facility guidance

The Federal Reserve System has updated its FAQs and the Municipal Liquidity Facility's term sheet.

Publication
|
May 18, 2020

Public and government finance

Global: The COVID-19 crisis: EU Competition Policy response

In response to the COVID-19 crisis, European Union (EU) President Ursula von der Leyen has formed a team led by eight Commissioners to coordinate the EU response.

On May 4, 2020, the European Union (EU) announced a package of measures to support the food and agriculture sector and mitigate the effects of the COVID-19 outbreak, including relaxing some antitrust rules on cooperation.

On April 8, 2020 the Financial Conduct Authority (FCA) announced a package of measures intended to assist companies to raise new share capital in response to the coronavirus crisis, whilst retaining an appropriate degree of investor protection.

Publication
|
April 09, 2020

Corporate, M&A and securities

Singapore: COVID-19 (Temporary Measures) Act 2020 introduced

The Singapore government has introduced the COVID-19 (Temporary Measures) Act 2020 (the COVID-19 Act) with the objective of:

Publication
|
April 07, 2020

Bankruptcy, financial restructuring and insolvency

Mexico: COVID-19 Update: Further clarification on the scope of ‘Essential activities’

As part of the continued efforts of the Mexican government to address and mitigate the impact of the COVID-19 outbreak, and further to resolutions relevant to the subject matter that have been issued just recently (particularly the resolution issued on March 31, 2020), on April 6, the Mexican Ministry of Health issued a new resolution seeking to elaborate and provide further clarification on the scope of “essential activities” that are allowed and encouraged to continue during the ongoing pandemic.

The CARES Act contains a number of tax provisions intended to provide relief for individuals, families, and businesses facing the COVID-19 pandemic.

Publication
|
March 30, 2020

Tax

(UPDATE) US: Small business loan options under the CARES Act

To manage the economic impacts of the COVID-19 pandemic, the US government has enacted new legislation to provide emergency funding for businesses.

Publication
|
March 29, 2020

Corporate, M&A and securities

US: The COVID-19 pandemic and the economic stimulus program for businesses

The COVID-19 pandemic has prompted US lawmakers to act by passing a historic economic stimulus program for businesses.

Publication
|
April 01, 2020

Risk advisory

Luxembourg: Implementation of the 5th AML Directive

New entities falling in scope, additional risk factors and stricter enhanced due diligence measures involving high-risk jurisdictions are some of the changes introduced by the law of March 25, 2020 partly transposing into Luxembourg law the Directive 2018/843 of May 30, 2018 (the “5th AML Directive”) and certain requirements of the Financial Action Task Force (FATF) Recommendations.

Publication
|
March 31, 2020

Financial institutions

US: Extended SEC filing deadline relief covers Form 20-F filers

The SEC issued an order that provides a publicly traded company 45 more days to file disclosure reports

Publication
|
March 27, 2020

Corporate, M&A and securities

UK: Construction sites and COVID-19

COVID-19 is having far reaching impacts on the construction industry’s supply chains, cash flows and workforces.

Update
|
May 22, 2020

Infrastructure, mining and commodities

UK: Business leases: suspension of the right to forfeit for non-payment of rent

The Coronavirus Act 2020 is a piece of emergency legislation to give the government powers to contain the spread of COVID-19, including powers to issue directions in relation to events, gatherings and premises. It had its first reading on March 19, 2020 and received Royal Assent on March 25, 2020.

Update
|
March 26, 2020

Infrastructure, mining and commodities

UK: COVID-19 issues for pension scheme trustees

The COVID-19 (coronavirus) pandemic is constantly evolving, with the Government’s advice being updated daily.

Update
|
March 25, 2020

Financial institutions

Italy: COVID-19: The Italian Government and ABI to support SMEs

As a consequence of the epidemiological emergency caused by COVID-19 (coronavirus), the Italian Government and the Italian Banking Association (ABI) have approved a number of measures to support micro, small- and medium-sized companies (SMEs) (as defined by the European Commission Recommendation No. 2003/361/EC of May 6, 2003 ), facing the economic impact of COVID-19.

Update
|
March 23, 2020

Financial institutions

Canada: Making sense of US travel restrictions in light of COVID-19

In the context of the global outbreak of COVID-19 many American citizens and green card holders are wondering how and if they can travel back to the US.

Publication
|
March 19, 2020

Employment and labor

US: State of the Union: COVID-19 now

Our team will discuss latest COVID-19 news and best practices.

Webinar
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March 16, 2020

Life sciences and healthcare

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